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No Contract Need Be Honored, Says Fed

The recent debacle occurring at AIG is almost (almost) laughable. Here we have a large company under contractual obligation to its employees. Because congress has tried to regulate the salaries of those on Wall Street, and because public opinion of big business is driven by the hostile media, corporate executives have found a relatively solid way of retaining the best and the brightest; they use bonus money. I get a bonus. Nothing near what Wall Street execs get, but a few extra dollars in the pocket are nice at the end of a long year. Am I going to be the next target? Am I being greedy?

Bonuses are in contracts. An employee gets a lower rate of pay, based on the assumption that performance bonuses will be paid at year’s end. Now, before you scream and cry at the fact that AIG lost a lot of money this past year, don’t forget that AIG is a huge company. The fact is that a lot of AIG’s divisions were profitable. However, they were caught by the severe downturn like the rest of the world. The reason they lost so much is the same reason that so many people lost their 401K. They are worth less. They have less available cash because their stock isn’t worth squat.

Does that mean that all of the bonuses should be paid? Well, yes. In fact, the very same congressmen (Dodd, Fwank) who are screaming at the horrific scene are the ones who wrote the terms of the bailout. In those terms, it is explicitly stated that all contractual bonuses will be honored. Why, then, are they coming out with such vehement rhetoric? Did they not read their own words? Why are they not clamoring over the union contracts that guarantee pay and bonuses? Is it because the unions are good and the evil, rich Wall Street guys need to be put in their place? Are they trying to fight for the little guys on Main Street?

Hardly.

The fact is that congress has, is, and shall continue to get funded by the very same people they are chastising. They put on this big front, making it look as if they care, all the while using this ‘crisis’ to drive a more socialistic agenda. As Ed Morrissey put it, congress could have avoided the entire problem by letting AIG file for Chapter 11.